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http://ssrn.com/abstract=1634628
 
 

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Intranational Trade and Regional Tax Rates: A Welfare Analysis on the U.S. Economy


Hakan Yilmazkuday


Florida International University

April 15, 2011


Abstract:     
This paper analyzes the effects of personal tax rates on macroeconomic variables at regional and national levels through a general equilibrium trade model with private and public sectors, migrating individuals, intermediate inputs and final goods trade, and an analytical solution. The regional model can explain state-level variables in the U.S. almost perfectly. The counterfactuals on the U.S. economy suggest that a nationwide increase in the state-level dividend-income tax rates would be the best option to expand the private sector, tax revenues, and, most importantly, the individual welfare in all states; a nationwide increase in the state-level wage-income tax rates would hurt the economy in all states; property and sales taxes have fewer effects on the U.S. economy. The results are mainly driven by intermediate input trade.

Number of Pages in PDF File: 54

Keywords: Regional Taxes, Trade, Public Sector, Private Sector, US

JEL Classification: H24, H71, R12, R13, R32

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Date posted: July 5, 2010 ; Last revised: December 19, 2011

Suggested Citation

Yilmazkuday, Hakan, Intranational Trade and Regional Tax Rates: A Welfare Analysis on the U.S. Economy (April 15, 2011). Available at SSRN: http://ssrn.com/abstract=1634628 or http://dx.doi.org/10.2139/ssrn.1634628

Contact Information

Hakan Yilmazkuday (Contact Author)
Florida International University ( email )
Miami, FL 33199
United States
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